2014: Year of the IPO and consolidation for CROs

By Zachary Brennan

- Last updated on GMT

Some of the top CROs saw fireworks in 2014
Some of the top CROs saw fireworks in 2014

Related tags Stock market

With PRA and INC Research joining Parexel, Quintiles, Covance and Icon in the land of public companies, 2014 was a year in which the top shelf of CROs filled out.

The stock market responded kindly to the idea of more public CROs as, like their peers, both PRA and INC saw their stock prices jump​ following their IPOs.

And now that the top eight players control 62% of the market​; a large global footprint, strong IT platform and a focus on innovative trials, especially when it comes to risk-based monitoring​ (RBM), seem to be differentiating small or mid-sized CROs and larger ones. All of these assets will help companies progress, especially as trials become more complex and the need for innovation increases.

According to ISR Research, 2014 also saw an increase in the number of trials using RBM, while EDC (electronic data capture) uptake also increased.

Quintiles CEO Tom Pike recently said on CNBC​ that the complexity of trials is helping Quintiles get a larger share of the market. “As we look out over the next two or three years, we see a tremendous, continued opportunity in helping with drug development and drug commercialization​,” he said.

Increasing Maturity

2014 also seemed to be a year of increasing maturity​ for CROs as the employee turnover rate fell, and as predictions – from Parexel’s CFO​ to market research​ -- for increased outsourcing picked up. Streamlined pipelines and the continued shift to strategic partnerships will continue to draw CROs closer to sponsors. CROs also expressed an interest in working more closely with big pharma industry group TransCelerate​, which should also forge tighter bonds between the companies.

In addition, preclinical studies saw a significant rebound in 2014​, which should bode well for the top preclinical players like Charles River and Huntingdon. Almost 25% of biopharma sponsors said they expect to award more preclinical work to large CROs as well.

And smaller CROs benefited from mergers and acquisitions, with the bigger players scooping up key supplements​, as smaller players, like Charles River​, prepare to increase the size of their businesses. Although at least one CEO told us this year that mid-sized CROs have business model problems​. 

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